Former professional cyclist Floyd Landis, who blew the whistle on rampant doping in the sport, particularly by former teammate Lance Armstrong, has admitted to defrauding 1,765 people who donated to a legal fund he organized to fight charges that he used performance-enhancing drugs himself.

Landis, who won the Tour de France in 2006, has agreed to repay nearly $479,000 to the donors who believed his initial denials that he had doped during his cycling career, according to a deferred-prosecution agreement he reached on August 24 with federal prosecutors in San Diego.

Landis was stripped of his Tour victory and banned from the sport for two years after the U.S. Anti-Doping Agency (USADA) concluded he had tested positive for performance-enhancing drugs. The agreement allows Landis to avoid prison; he could have faced 20 years had he had been charged and convicted on one count of wire fraud.

His attorney, Leo Cunningham, a partner at Wilson Sonsini Goodrich & Rosati in Palo Alto, Calif., did not return a call for comment.

The agreement came one day after Armstrong, who won every Tour de France between1999 and 2005, announced that he would stop fighting an investigation by the USADA into whether he had doped. On August 24, USADA stripped Armstrong of his seven Tour titles and banned him from cycling forever. Armstrong, now retired from professional cycling, continues to deny he ever took banned substances during his career.

Phillip Halpern, chief of the major frauds and special prosecutions section of the U.S. attorney’s office in San Diego, said the timing of the two announcements was purely coincidental.

“Because of the use of performance-enhancing drugs, Floyd Landis lost his 2006 Tour de France title, his job as a racer with Phonak and his career as a professional cyclist,” Halpern said. “This prosecution was not brought because of the use performance-enhancing drugs. It was brought because he defrauded thousands and thousands of victims out of hundreds of thousands of dollars.”

Landis was a member of the U.S. Postal Service team, for which Armstrong also raced, from 2002 to 2005. He was on the team sponsored by Phonak Holding A.G. of Switzerland from 2005 to 2006. He won the Tour de France while racing for Phonak.

Soon afterward, the National Laboratory for Doping Detection in France announced that Landis had tested positive for synthetic testosterone. Landis denied the charges, and the International Cycling Union conducted its own tests. Those results also came up positive.

Landis was stripped of his title and USADA took over the investigation. On September 20, 2007, the American Arbitration Association upheld USADA’s finding that Landis had tested positive for the testosterone and banned him from the sport for two years. Landis, who in 2007 published a book called Positively False: The Real Story of How I Won the Tour de France, appealed to the Court of Arbitration for Sport, which denied his appeal on June 20, 2008. He sued in federal court in Los Angeles to vacate the agency’s decision, but both sides voluntarily dismissed the case on December 4, 2008.

He had established the Floyd Fairness Fund in 2006 to counter findings of doping by both administrative agencies and to pay for legal costs associated with the court case.

In May 2010, Landis admitted using performance-enhancing drugs, including testosterone, human growth hormone, insulin, pregnancy hormones and erythropoietin (which boosts red blood cell formation), according to federal prosecutors. The criminal investigation into Landis, who lives in Southern California, began about two years ago.

“The basis for jurisdiction in the Southern District of California was the fact that Mr. Landis conducted several major fundraisers in our district, and there were many, many victims of his fraud that are located in the Southern District of California,” Halpern said.

Landis reportedly spent more than $2 million to defend himself against doping charges, much of which he raised through the Floyd Fairness Fund. He agreed to repay $478,354 to 1,765 donors who contributed during 2007 and 2008.

“We were focusing on the people who gave directly to the Floyd Fairness Fund, either through PayPal or his Web site, as that was the vehicle he used to defraud members of the public in general,” Halpern said.

Under the agreement, Landis must make the restitution payments during the next three years; if he does not, federal prosecutors reserve the right to charge him. Halpern said he was optimistic that the cyclist would fulfill his restitution obligation.

“He’s got a very, very good attorney,” Halpern said. “And we spent quite a bit of time negotiating the settlement and terms of the restitution, the payment schedule, and we’re fairly confident that Mr. Landis can meet the restitution schedule. If he doesn’t, he’s now exposed to a felony and 20 years in jail if he doesn’t meet the terms of the agreement.”

Contact Amanda Bronstad at abronstad@alm.com.